Tax details on selling my property. I am selling my property which is on both my wife and myself. I needed tax details i have to pay to Government. If i have to reduce or avoid tax payment. What i have to do? I am selling property for 50 Lakhs.I bought this property for 4.5 Lakhs. Thanks, Nagappan
Dear Nagappan,
Let us know the following:
1. When did you purchase the property?
2. Have you done any major improvement in the property? IF yes, date of improvement?
3. Whether it is a plot or a house? and do you have any other house in your name whether jointly or independently?
4. Are you ready to invest the money in bonds or another house to save taxes?
Please feel free to call/revert in case of any queries
Thanks and Regards
Abhishek Dugar
CA CS B.Com
Dear Mr. Nagappan,
Since it is a Joint Property, Capital Gains shall be assessed jointly.
The following further details are required for Computing the Capital Gain Tax Payable.
1) Date of Purchase and Stampduty,Registration charges paid during the purchase.
2) Date of Sale , Value for which the same is registered,, Value adopted for Stamp Duty payment
Based on the same , Capital Gains shall be calculated.
The Capital Gain tax can be planned in the following manner :-
1) Purchase of House Property within 2 years/ Constructoin of New House Property within 3 years from the date of Sale. Till such time the amount shall be deposited in the Capital Gains Account Scheme.
2) Purchase of Capital Gain Bonds (REC,NHAI,etc.,) with a lock in period of 3 years. After the lock in period, the amount can be utilised for any purposes as required.
Please free to contact in case of any additional clarifications.
Thank you
CA B S Sridhar, Chennai
1. When did you purchase the property?
October 2003
2. Have you done any major improvement in the property? IF yes, date of improvement?
No
3. Whether it is a plot or a house? and do you have any other house in your name whether jointly or independently?
Plot
4. Are you ready to invest the money in bonds or another house to save taxes?
Yes. I am Interested in Investing in my own Business and Property. But how much i have to Invest to reduce tax.
3. Do you have any other house in your name whether jointly or independently?
Yes. I have another House Independently in my name. Hi,
there are three ways in which you can claim tax exemption from long term capital gain.
1) Section 54: In case the asset transferred is a long term capital asset being a residential house, and if out of the capital gains, a new residential house is constructed within 3 years, or purchased 1 year before or 2 years after the date of transfer, then exemption on the LTCG is available on the amount of investment in the new asset to the extent of the capital gains.
If a taxpayer purchases/constructs a house and claims exemption under section 54 and then the new residential house property is transferred within a period of 3 years from the date of its acquisition/completion of construction, then the benefit granted under section 54 will be withdrawn.
2)the amount of capital gains not appropriated towards purchase or construction may be deposited in the Capital Gains Account Scheme of a public sector bank before the due date of filing of Income Tax Return. This amount should subsequently be used for purchase or construction of a new house within 3 years.
3) Section 54EC: It provides that if any long term capital asset is transferred and out of the consideration, investment in specified assets (any bond issued by National Highway Authority of India or by Rural Electrification Corporation redeemable after 3 years), is made within 6 months from the date of transfer, then exemption would be available as computed in Sec. 54EB. The Finance Act, 2007 has laid an annual ceiling of Rs. 50 lakh on the investment made under this section w.e.f. 1.4.2007.
your capital gain amounted to rs 39,06,587.
if you invest in your own business you cant claim tax exemption
Follow up Question ...I am getting only 50 Lakhs from buyer. But the Property Value as per Government is 85 Lakhs. If i am Taxable for only for the amount i am receiving or the Guideline Value(Registration Value). Thanks, Nagappan
You ll be liable to tax on guideline value. Better transact at guideline value because you'll have to pay stamp duty also on the guideline value.
According to Sec 50C of Income Tax Act, 1961, if an assessee transfer a capital asset being Land or Building or both at a value less than the value adopted or assessed (in case of registry) or assessable (in case transfer is by power of attorney) by Stamp Valuation Authority for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall be deemed to be the Sale Consideration of the Capital Asset.
Therefore even if you sell below the Stamp Duty Value, Sale Consideration for the purpose of calculating Income u/h Capital Gain will be the Stamp Duty Value assessed or assessable by Stamp Valuation Authority.
so your sale price will be Rs 85 lakhs not Rs 50 Lakhs
Sir we think already you are in conversation with our professional colleague. Will wait for giving answer.
But last point i will answer.
As per Section 50C the sale proceeds will be taken as government value or document value which ever is more. Thus in your case the govt value i.e. 85 Lakhs . If you can take valuation report from income tax approved valuer stating that the value of the property is 50 lakhs only then you can defend your case.
Dear Sir,
I assume all your earlier queries have been answered. I will answer only your last query.
You will be liable to tax on the Government Value and not on your Agreement Value. So it is preferred if you make the agreement on the Govt value.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP.
you will be taxed at registration value
